Lessons from CA’s internal startup accelerator

2017 saw CA acquire two companies in Veracode and Runscope. Throughout its 40-year history, the New York-headquartered application development company has made over 200 acquisitions.

For the immediate future, CA looks like it will continue its recent trend of combining internal innovation with the occasional acquisition. Jacob Lamm, Vice President of Strategy And Corporate Development told IT Pro the company plans to “augment its organic strategy” with acquisitions of around $3-500 million a year. But during a press Q&A, Chief Product Officer Ayman Sayed was keen to highlight the company is “focusing first and foremost on organic innovation.”

Luckily, one of those acquisitions had a ready-made innovation hub already brewing. When it acquired Rally Software in 2015, CA inherited Rally Labs, the company’s own internal startup incubator. This, combined with CA CTO Otto Berkes’ desire to foster innovation, led to the founding of the CA Accelerator.

CA CEO Mike Gregoire has said previously he wanted his company to be known as “a company that builds great software, not a company that buys companies.” As part of this vision, the company has been working hard on its own internal startup incubation program.

Though described in greater detail in my piece on the subject from last year, the process is simple: any CA employee can pitch an idea via a one-page lean canvas. Successful canvases make a pitch and then the powers that be decide whether to give the project the green light that same day. Companies are given a small amount of funding, and then treated as independent startups with regards to management and product development, but have the security and backing of CA.

Having been relaunched in 2016, the program is now at the end of its second year. When asked how he felt the program was going, Otto Berkes said; “It's grown very nicely. Frankly, it's exceeded our expectations.”

The incubator now has ten startups, with four entering the program in 2017, and one pausing. Successful pitches so far are all from the US, but the company is keen to emphasize the fact that anyone from any part of the company worldwide can apply, and has had pitches from various locations around the world, including its Indian office. And there are more coming in 2018.

“We have several new ideas that have been successfully pitched but we haven't yet had a chance to bring them into the program,” says Howard Abrams, SVP, Incubation at CA. “We're starting to build up a little bit of a backlog of ideas which is a great sign that we can keep the quality of the ideas that are coming in, and we don't have to lower the bar to get things.”

There are many benefits of internal incubation and ‘intrapeneurship’, but it’s far from easy to get right. Though some companies have very successful programs – Samsung’s C-Lab, Microsoft Garage, Google’s Area 120, Adobe Kickbox, AT&T Foundry, PayPal regularly announces new entries to its program – many fall by the wayside. AOL’s Area 51 seems to have been discontinued, little was heard from LinkedIn’s [in]cubator after its inception in 2012, Facebook killed off its Creative Labs in 2015.

“We recognized very early on in the program that we couldn't just copy someone else's program and put it inside CA,” says Abrams. “It was important that we tailor it for what CA needs and how CA works, and making sure we had alignment with all the stakeholders.”

He adds that it is important to make sure those stakeholders are all aligned around what the program is, what it does, and why the company are running it, in order to ensure there is no politics that that could interfere and ruin the program.

Customer measurement is also key.

“Everyone has an idea and a bias. That's great to start from, but you have to go in with an open mind when you're talking to customers and make sure they really have the problem you think they do, and that it's really important enough that they're actually willing to pay you to solve it.”

“Often they either don't really have that problem or they don't think it's a big deal and if they don't think the problem is a big deal then they're not going to want to buy a product to solve that.”

Abrams also feels that transparency around the program is key, especially around what's working and what's not working.

“A lot of times you look at skunkworks type programs going on in the business and they hide under the surface; they siphon off resources from other projects, they're not keeping track of spending, or what their objectives are, or how they're meeting those objectives.”

“And we're trying to do the exact opposite: here's how much money we're spending on this business month to month, here's how we're measuring the success or failure of that, here's how we're doing against those metrics, and then we meet as a team to evaluate these businesses and decide if they should continue on with the hope that we're making objective decisions based on the data and I think that's a recipe for success.”

“If you do that, it's hard to complain about the program. The businesses might not be successful, we might not be able to churn out a dozen Waffles [see below], but we'll be open and transparent in the program and overall the program will be a success.”

While CA’s program is set as a standalone entity within the company, it doesn’t have to build that way. Abrams says such incubation models could work inside individual business units, or however you think it could best work within your own organization.

Helps the business, helps the people

There’s more to incubation than new products and increasing revenue. It helps quell any perceptions internally or externally of inertia; making the company more attractive to new talent and lets current employees know there’s room to grow and innovate within the company.

It also helps employees personally.

“When an employee comes into the program they often only have a subset of the skills that are needed,” Abrams explains. “If it's a software engineer or an architect or a product manager they know their area really well, but they have to learn new skills and how to run a new business, how to grow a team, how to complement their skills with other peoples’. Basically, they have become true leaders very independent from how their old job would have been.”

“And this has potential for a huge impact later on at CA. Whether these businesses are successful or not these leaders are going to rotate back into the business and now they have enormous amount of experience.”

And, regardless of the outcome, the very fact these startups exist can help the business with internal processes.

“We’ve drastically improved the way we do things,” says Abrams. “Contracts with vendors internally move faster, and the way we interact with our legal team more collaboratively is going to allow CA overall to execute better.”

For example, Waffle.io’s pricing structure includes a personal $5 a month tier that requires just a credit card. CA’s history of enterprise products meant the company had to make adjustments to facilitate such a pricing structure.

Jarvis & Waffle

So far, the only graduate from the incubator was Project Jarvis in 2016. Now known as CA Jarvis, it’s the company’s internal analytics engine, which the company plans to use across the company’s product lines to provide a unified set of analytics capabilities. Originally launched as CA’s Mainframe Operational Intelligence, it has since been integrated into CA’s Agile Operations, API Management and Security lines of business. The company is looking to release Jarvis as a standalone analytics product in the future.

The next expected success is predicted to be Waffle.io. An automated project management tool for teams using GitHub, Waffle is a veteran of the program having been part of the original Rally Labs, and now has over 140,000 users. Otto Berkes describes Waffle as the most mature project within the incubations and most likely candidate to exit, and one that the incubator team “is watching closely.”

“Waffle is growing great. It's really exciting to see them get traction in the market, but we don't want to graduate something too early,” says Abrams. “People get really excited but we don't want to push it off into a business unit without making sure the financials are solid, that the business is scalable, all these things. And that's what Andrew is doing right now; working through how exactly it could fit into a business, how exactly does this scale, and grow over time.”

Beyond Waffle and Jarvis, the program has projects around IoT, meeting scheduling, coding productivity, and skills surfacing. The hot topic, however, seems to be around everything containers. FreshTracks.io, which opened for registration during the CA World conference, is the fourth container-focused project within the accelerator, along with Blue Lantern, Qubeship, and Yipee.io.

“I feel quite strongly that containers and microservices are absolutely going to be a design pattern that will be standard in the future,” Otto Berkes told IDG Connect, “so we're trying to get ahead of that and build the right tools to support that space.”

The company have had a couple of pitches around Blockchain that haven’t been successful, but Abrams expects a Blockchain or Distributed Ledger-based startup to enter the program in the coming year.

One of the class of 2016, FortyTwo.io, ceased operations in 2017. The startup was looking to mitigate threats such as DDOS & malicious bot attacks, and initially found that many people agreed it was a problem.

“The challenge came that customers, even though they recognized it was a problem… It wasn't painful enough that they're willing to do something about it, and the few that were even looking to do something about it were looking at more the IP layer to solve it.”

Unlike most startups however, it was killed by its creator.

“The woman who ran that came into her monthly review meeting and pitched the team on why we should shut it down. She walked through; here the things I tried, here's where I failed, if you've got other ideas and you know where I should continue to look I'm going to do it, but it doesn't seem to make sense for me to go forward with this. She had a convincing case and we paused it.”

I ask Abrams if internal incubation could be a stepping stone to CA doing something externally in a more traditional Venture Capital model. He says that while it’s possible and there are benefits to such a model, especially around easy market validation, you lose the benefits of people and process improvement internally, and there are no current plans around any external funds or incubators.

“We've learned a lot over the last year and we've improved the program, and overall been really happy with the progress we've made. I'm excited for the next year to see how these businesses grow and evolve.”

Here’s a look at the new startup incubations CA entered into its accelerator program in 2017:

Blue Lantern

Hailing from Long Island, Blue Lantern focuses on Container security. Joining the program in July 2017, it provides integrated exposure detection techniques and improved security risk profiles for containers, and aims to enable applications to be built quickly without added risk.

kaizenOps

KaizenOps wants to bring Machine Learning to Site Reliability Engineering (SRE). The Santa Clara-based project joined the accelerator in March 2017 and wants to provide more insightful and actionable monitoring information to help quickly mitigate production application incidents.

KnowThings

Plano, Texas-based KnowThings is aiming to improve testing environments for the Internet of Things. Joining the accelerator in January 2017, KnowThings uses Machine Learning to provide IoT developers with realistic data scenarios at a fraction of the cost and time over traditional simulation and emulation solutions.

Dan is Senior Staff Writer at IDG Connect.
Writes about all manner of tech from driverless cars, AI, and Green IT to Cloudy stuff, security, and IoT.
Dislikes autoplay ads/videos and garbage written about 'milliennials'.

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